The Dirt Lawyer's Blog Archive

NALP, the National Association for Law Placement, has a study out stating that there are plenty of jobs for lawyers, but the pay is not the huge sums the media talks about. According to a NALP press release , while jobs may be aplenty, "It is also clear, however, that a strong employment market does not mean that every new graduate started work at a large firm at one of the much publicized $135,000 or $145,000 salaries. In fact, just 14% of salaries were either $135,000 or $145,000. Far more, 42%, were $55,000 or less. Far more graduates started work in small firms of 50 or fewer lawyers or in non-firm settings (71% of those employed) than at firms of more than 100 lawyers (just 20% of those employed)." And those numbers are up from last year. Check out the link for more interesting details. I hope every aspiring lawyer thinking s/he is going part of the 13% (and becomes a lawyer for no other reason) reads and thinks long and hard about this before going six figures into de

Wolf Point is a parcel of land right at the confluence of the North and South Branches of the Chicago River. As the crow flies it is about 300 yards from my Chicago office. The Kennedy family owns the dirt, having retained it after selling the Merchandise Mart and the Apparel Center to Vornado. The Kennedys, in connection with Hines, L.P. (the office developer) and Habitat Co. (a well-known local residential developer) have revealed plans to build three buildings on the four acre site: an 89-story tower with condos, apartments and hotel rooms, a 40-story building with a million sf of office space and a 56-story condo tower. Cesar Pelli is the architect. Here's some random thoughts on the project. Notwithstanding the glut of hotels and condos, this project could do very well just because of the spectacular location. You can get an idea of the types of views by watching the Nicolas Cage film The Weather Man . And who knows what the market will be like in five+ years anyway? This is

Most people were very happy for me when I decided to end the daily grind of working at a first-rate boutique law firm specializing in real estate. It really was one of the toughest decisions I've ever made because I truly liked the place. Some, however, said I was doomed to working on routine, even dull legal work because only the big firms got the "sexy" deals (note the use of quotes because I've yet to see an arousing real estate deal). Admittedly, I do some more mundane work these days than I used to. And that is okay. I also have some cutting edge work, too, and time to write and do other things I enjoy. Besides, clients are apparently becoming more and more interested in attorneys like me to do their legal work, both large and small. And this is all in spite -- or perhaps because -- of the mega mergers in law firms and predictions that people like me would go the way of the Model T. Why? Check out this story about small firms and solos working for compani

One of my earliest posts predicted potential bargain luxury hotel rates in Chicago in a few years because so many new rooms were coming on line. A story in Crain's quotes people who are more sanguine than I about these prospects. McCormick Place West is now coming online, which will help Chicago compete with other markets for the largest conventions (union rates and so-so onsite food choices notwithstanding). But a 25% jump? Hmmmm. The story cites one developer who "says he has seen financials for proposed developments projecting average daily rates of $400 to $500, 'which are insane in Chicago.'" I cannot disagree with that if it is true. Maybe at peak times, yes, but every day? How can you realistically underwrite that? If this trend is accurate, predictions of foreclosures and bankruptcies down the road are probably not far off the mark at all. I'll be interested in following this as both a real estate guy and as as a hotel consumer.

I thought it might be interesting to talk about legal terminology from time to time. Watching an old episode of The Jetsons was the clincher to start with encroachments. An encroachment is when a structure intrudes on to the land of another. Usually it is a fence, a garage or some kind of building. Sometimes an encroachment can be on to someone's easement, which is one form of a right to use another's property. A common example of this is a toolshed built over a utility easement. I cannot tell you how to deal with any particular encroachment because the resolution of such a matter is really done on a case-by-case basis. Sometimes it is a big problem, other times it is not. Sometimes title insurance is available, insuring over forced removal or diminution of value or against adverse possession (an interesting topic for another time), and sometimes ( e.g. , especially with fences) it is not. As we all say, consult your attorney. Some of you are probably asking: why the he

This came in over the weekend -- CMBS defaults in the second quarter are up 13% from the first. The other bad news is that some of the defaults are on very recent loans, which is leading some to speculate that the subprime problems in the residential market may leak into the commercial market. We all talked about lenders chasing all kinds deals with very aggressive terms because there was just SO much money out there begging to be lent. But we also have to remember that these defaults are still near historic lows. And perhaps more important (a) buyers are still looking for deals at right prices, even on defaulted properties, thus mitigating damages, and (b) most important of all, real estate fundamentals are solid thanks to generally rising rents. So don't panic -- yet. By the way, if you want to learn more about CMBS, check out Simple RE . I just saw it for the first time thanks to David Bodamer and it is clear that Kenny Pratt knows what he is talking about!

In a post on Thursday I mentioned that downtown office buildings in some major markets were doing well, but that I was concerned about, among other things, rents and vacancies in the suburbs. Here's a story in the Tribune confirming my suspicions . The gist of the article? Because of the subprime residential debacle, businesses that service the residential market such as mortgage companies, mortgage brokers, title companies and the like have given up 1,000,000 sf of their space, thus creating even more vacancies in the 'burbs. Vacancies mean lower rents and lower sale prices in the suburbs. The real question is to see whether the trend continues over the long term or not. And will some tenants choose to relocate or move some portions of their businesses out of downtown to save money? If the predictions of rising downtown rents are correct, I would not be surprised.

A bill has been introduced in Congress ( HB 2834) that would change the way many real estate developers -- most of whom are entrepreneurs -- would be taxed . Okay, you may ask: what is carried interest? Better known in my circles as a "promote," carried interest is the percentage of a deal involving a venture that the developer takes as compensation, usually through a limited amount of capital investment and a lot of sweat equity. Often what happens in a development deal is this: The developer (or "promoter") hooks up with a party with funds to invest (the so-called "money partner"). The parties reach an agreement on how the profits from an investment are to be split. Without boring you with too many details (you can hire me if you want more), when the deal is done (or maybe when there is a financing that allows the members to take cash out), the first dollars go to the money partner, which gets its money back plus a preferred return, after which the prof

Income of two major real estate players in two different sectors is rising. At Brookfield Properties net income doubled thanks to higher rent and asset sales. And at Kimco net income rose 18% , also on higher rent and on acquisitions instead of sales. As mentioned previously , strip center vacancies at properties such as those Kimco specializes in are up. But Kimco, the biggest player in the game, is apparently and not surprisingly doing a good job of keeping occupancy up. And if the NOI of individual properties rise, then so should its value, notwithstanding any subprime lending crisis.

I have written before about Mayer Brown Rowe and Maw, a firm I have admired over the years. We all know about the Refco matter and there's another lawsuit out there that I chose not to write about. It was therefore difficult for me to read this story , originally in Legal Times, about turmoil at the firm, management changes as Chicagoan Ty Fahner (a lawyer's lawyer who reached a mandatory retirement age), the prospect of much more de-equitization at other offices (or more?), departures of major rainmakers, management issues and the like. The story did not paint a pretty picture about one of my favorite big firms. I realize this could just be the sour grapes of former partners (some of whom chose to remain anonymous), but my gut says there may be more to it than that. As the future progresses we will have to see how things fall out.

Yesterday I quoted Zara Younan , who was looking to buy a building here in town from The John Buck Co. The Sun-Times has an interesting profile on Younan today and his quest to build the world's tallest building, perhaps in Chicago. Based on this story, Younan reminds me of a restaurateur in the Chicago area from my childhood named Sam Sutter . Sam's most famous place was the King's Palace steakhouse, which, for you Chicagoans, was located on the current site of the Honda, Infiniti , Volvo, etc. dealers in Rt. 53 in Lisle. (It burned down in the 1970s.) Sam was an immigrant (from Armenia, if I recall correctly) who wore his Americanism on his sleeve. Younan reminds me of Sutter , and that is a good thing in my opinion. My only concern? He's not the first guy whose has wanted to build the world's tallest building. The cost will be huge (to borrow a Donald Trump-ism), and the last person who tried to do this in Chicago, alas, failed . I nonetheless wish

Cushman & Wakefield is reporting that office rents in the second quarter of 2007 are up 12% compared to the same period in 2006, with vacancies at a seven-year low. Apparently, and not shockingly, New York and San Francisco are leading the way. We also know that downtown Chicago is doing well, too . So be happy if you own a building there. I'm not trying to be Mr. Pessimist, but, just like all politics is local, so is real estate. What about suburban rents? Some are well, and others not. Some markets may be slow for a long time. Note the following from Bloomberg's story: "The country's highest office vacancy rates in the second quarter were in Dallas, at 29 percent, and Atlanta, at 24.6 percent. Rents in Dallas rose 5.2 percent, and in Atlanta they dropped 1.4 percent. Both cities are feeling the effects of development booms from the past several years...." So, if you bet right and bought in those markets where land is scarce and demand high (and what

You might be wondering what the Chrysler-Cerebrus deal and the inability of the investment banks to sell the debt has on the commercial real estate market. Perhaps none. But let's talk it through. Chrysler is a company in trouble. If it was dirt, I'd consider it B-piece or a low-tranche debt in a CMBS deal. But what about stronger companies? Yeah, credit is tighter but that just means you do not leverage a deal as much as we've seen. Many dirt deals are not done with huge amounts of leverage. Sure, we hear about the super-leveraged transactions and even do them from time to time, but they are probably the exception. Commercial real estate is still on the rise, or so says the Fed's Beige Book that was released a few minutes ago . More importantly, you still have the mezzanine market to consider and to use for high-leverage real estate deals, though probably not for the low-cap rate purchases. I used to do much more mezz financing than I do now, but money is sti

As expected, it did not take long for GE to close on its acquisition of the suburban portion of the Blackstone properties acquired in the EOP deal. Unlike other deals, only one property was flipped, and that was because it was in Bannockburn, which is outside GE's target property area. It is nice to see that GE is looking at a mid-term hold on these buildings. They have high occupancy and should remain that way. Meanwhile, back downtown, two different JVs led by John Buck Co. and Golub & Co. have pulled office buildings off the market after negotiations with two California based companies to acquire 200 W. Monroe and 225 W. Washington. Crain's reports that the Buck deal had a signed LOI (glossary: "letter of intent" -- usually but not always non-binding) but pulled out anyway. Perhaps both sellers were not getting the returns they expected. What stuck out in this story the most is a quote from Zara Younan, principal of the eponymous Younan Properties, Inc.

....uhhh..... given the mayor's past love for wrought-iron, about 103%? Actually, if some money is needed to preserve the Louis Sullivan masterpiece, I say go for it. Oh. Here's the link . You will also find dirt on tenant negotiations and the financing.

Bloomberg reports that the CDO market is practically at a standstill , meaning losses in underwriting fees and very tight credit, even for the likes of Blackstone and KKR. If you do not understand collatertalized debt obligations, click on the link above and read. And read about the relationship with collateralized loan obligations and the speculation that more Bear Stearns-like bailouts may be on the way. This could slow down the huge deals being done at low cap rates. It might also slow down smaller and mid-market deals, but probably not to the same extent as other methods of financing are available.

I know, I know, I know: law, especially BigLaw, is becoming a business more and more each day than a profession. Tom Collins at morepartnerincome had a very interesting post on law firm partnerships today. Citing a post from the from the always-interesting Carolyn Elefant and an article by Janet Ellen Raasch , Tom contends, "The truth is law firms have traditionally not recognized “ownership” shares in a law firm the same way ownership shares have been viewed in the commercial world. Even given that tradition, something new is going on. Things are changing. A transition is underway." On the other hand, you have people like Thomas Grella, a MidLaw managing partner and chair of the ABA Law Practice Management Section . Cited in Janet's articled, Grella, "Some see these changes as positive and leading to a stronger business model for law firms. Others see them as negative and driving away valuable talent. "Many of my current partners previously worked at

Here is the scoop on the $1.85 billion sale by CalSTRS of one of its biggest industrial portfolios to a JV of Lehman and ProLogis. CalSTRS was advised by my friends at CB Richard Ellis Investors, who have a great track record with this institutional types. According to the story, "There are 114 industrial properties in the ProLogis-owned portfolio, totaling 24.7m s.f. (0.185806m2), located in Reno, Las Vegas, eastern Pennsylvania, Chicago and Tejon Ranch in Southern California." And (as I shake my head in disbelief), the cap rate was below 6% and might have been lower had there been more California dirt involved.

Because it is new construction it is really development, and thus within this blog's bailiwick. New home sales last quarter were at lows not seen since the early 90s. And there's no end in sight. In the city, you have a "glut" of new buildings online or under construction. I use glut in quotes because we've all been talking about this for, oh, seven years, and things bounce back. If it isn't and prices plummet then I guess I'll have that pied-a-terre I've always wanted sooner than later. The suburbs actually scare me far more. There sales are down to levels last seen in the recession of the early 90s. Most firms have laid people off and some companies are going under or on the brink. And there are rumors that new developments, even some with models, are just being shut down, sold off and left as farms for the foreseeable future. This can bring down land prices, which may be good from my perspective as a developer's counsel. I spoke to a so

I could not believe this story in the Sun-Times today about people complaining about paying $9.00 to park for the day at a surface lot at Clinton and Kinzie. (Full disclosure: I often park my SUV there when I go to my Chicago office, so I know the lot well. The usual attendant is a great guy.) Those rates are only going to go up as more parking spaces are taken up by development. Try parking in New York, or downtown LA or Century City. And don't even go to SF. If it gets to be too much, then don't drive downtown. By the way, there's still some comparatively cheap parking in downtown Chicago. And other than Clinton and Kinzie, no, I'm not going to tell you where it is. It took me long enough to find some of these places and there's enough competition for the spaces as it is.

Did you stumble upon this site because you are a budding investor looking for education and advice about investing? If so, I've been meaning for a few days to link this great post from bawldguytalking.com about this very subject. There are good books out there, but the books, while well-written and well-intentioned, are not only not a substitute for experience but could end up costing you in the end. I love this quote from the post: "The moral of the story? Most folks investing based upon short term observation, or a “really good book they read” are, many times, creating the environment for their own personal train wreck." This also reminds me of the old joke: A tourist stops a New Yorker on the street: "How do you get to Carnegie Hall?" The answer? "Practice, practice, practice!" Believe me, I've read more than a few excellent books on real estate investing and real estate law, But I am a better lawyer and dirt guy than I was ten years ago be

Moody's Investors Service, one of the major rating agencies, says it is being passed over on 75% of CMBS rating assignments because of tighter credit standards than its competitors. This is just like me choosing a lender. One lender makes me do a, b, c, d, e, f, g, h and i and its competition only makes me do a, b and c. All else being equal, who do you think I choose? You shop agencies just like you do lenders. Of course, the people who might get hurt are those expecting to clip the coupons. For a great analysis of the situation, check out Mike Shedlock's thoughts on the situation . Here's a stellar sample of his thoughts: "So this talk of a "tough stance" by Moody's is a total crock. OK so maybe Moody's is losing out on a few ratings because of shopping around. So what? Not playing the ratings game scam is easy to do now with all of these blowups we are seeing. It's much tougher to do what needs to really be done, and that is to downgrade much m

What does food have to do with dirt? Development, development, development, my friends. Let me say this right out of the box: I come not to bash Bolingbrook but to praise it. My parents moved to Bolingbrook when I was a little kid, and I consider it my hometown. And I still own property in Bolingbrook. I've written about this to some extent before so I will try not to bore you too much. Bolingbrook in the early 1970s was a small town in the middle of the world's largest cornfield. No stoplights, one grocery (Totura's, which is still in Lemont), no post office, one fast food restaurant (Mr. Quick), a 7-11 and, if I recall correctly, a Union 76 truck stop and three gas stations (Shell, Standard and Hauck Oil [now Speedway]). That was about it. The growth of Bolingbrook into a village of 75,000 has been a sight to see. And I have enjoyed the ride, even though the 70s and 80s were bumpy because of crowded schools, congestion and other growth-associated problems. It took about 2

Just when I report that REIT prices are in the tank, we learn that insiders are buying at a rate higher than at any time in the last six years, so you know what that means. Either stock prices will go up or the value of commercial real estate will take a dip. Or are people just enthusiastic about the market conditions?

Just when the rumors about Macy's start dying down, they pick up again. But this time the suitor is not Andrew Lampert but KKR. Or so reports the AP this morning. According to the story, if KKR buys they will keep current management in place, so hopes of Chicagoans seeing the Marshall Field name back are probably not high. It will be interesting to see how this one plays out, especially with the value of Macy's dirt that is out there.

The star-crossed Block 37 saga goes on and on and on. According to the Tribune, the largest tenant in the new office portion of the building, Morningstar , is suing the previous developer, Mills Corp., over the size of its premises. Originally, the financial service firm planned to lease 211,000 square feet, but apparently with the building closer to completion the remeasurement of the building is indicating that the space will be something more like 237,000 square feet. Premises measurement in a new development can be complicated. The typical standard is that of BOMA , the Building Owners and Management Association. There is virtually always a “load factor” calculated here, which is a multiplier that takes into account the tenant’s pro rata share of the common areas of the building. We’re talking more than 10% here, though. I have not read the lease, so I have no idea what it says about the measurement or remeasurement of the premises. Nor do I have a clue about the lease negotiat

For so many years, electronic game makers have tried to create realistic lifelike gaming experiences on a PC. Do you old-timers remember the game Myst? One of the most ballyhooed of these experiences is Second Life , the virtual life experience where people literally live online through characters. What makes it important from a dirt perspective is that Linden Labs and developers sell virtual patches of real estate -- yes, your own little virtual universe -- not to mention all kinds of other items. Some big companies signed on to the idea thinking that it could be a good promotional opportunity. Personally, though I have been a computer junkie for many years, I never got Second Life. I did check out the website but never registered. Maybe I am too old to get it. Or, perhaps that fad -- not to mention Second Life itself -- is peaking . Revenues are down. Even at peak times, with 8,000,000 registrations, apparently no more than 40,000 people are there at once (which I thought was

Jenner & Block just announced that Ron Grais is joining the firm from Schwartz Cooper . Ron is a senior guy who has been around the block more than once and on all sides of the deal, including as a developer. I don't know Ron personally but I do know his work and some of the projects with which he has been involved over the years. With its first-rate bunch of litigators, Jenner has never really been known for its real estate practice. But Don Resnick, one of the deans in the field and someone I have crossed paths with once or twice, is there and the addition of Mr. Grais only strengthens Jenner's hand in dirt.

Thanks to The Real Estate Bloggers for finding this gem . $12,000,000,000's a hefty number....we are talking 30% assets in dirt, it appears. I've done deals with CalSTRS in the past, and I can tell you first hand that they are savvy and smart investors. I guess I was a little surprised by some of the analysis. London, after all, has among the highest property values in the world, but it also has some of the highest rents and the lowest vacancies. I always thought our dirt was comparatively cheap to that in Europe. But if they say the European market is a good place to invest, it is hard not to listen. UPDATE: Now that I think about it, maybe it is both an investment play and a hedge against an ever- falling dollar against the pound and the euro.

I've written in the past about some of Chicago's best firms deequitizing partners that do not meet the firm's productivity "standards". This is a trend all over the country these days. But it is world-wide now. British firms were always known for their lockstep compensation packages ( a la Cravath in New York), lower hours and tenure system. But when one of the Magic Circle firms, Freshfields, is doing the same thing , you have to sit up and listen. It all come down to this: you wanna do the BigLaw thing? That's great. But the so-called "good old days" are over and have been supplanted by business concerns. The trade-off? Phenomenal compensation that you, in a word, EARN.

Just when you think things have to slow down, another portfolio of Chicago office buildings goes on the market. I can't blame them given the IRRs you'll get on such a short hold. You know those nice metal plates on the fronts or in the elevators of buildings identifying the owner and manager? I'm starting to wonder if a piece of paper and a laser printer might be a better idea.

I'm not sure. I did take some money out of them recently given the plummet in that market. But some analysts are suggesting that, if you make the right play, some blue chip REITs are undervalued right now. I'll leave it to you to decide; after all, it is your money, not mine.

In a previous post I teased renowned architect Frank Gehry for receiving a chunk of the Inland Steel Building, only to have its owners decide to flip the property and take a tidy profit. Gehry wanted to be a long-term owner. Given the news over the weekend that the building has been sold to Capital Properties LLC , while Gehry is going to keep his interest in it, I have to give the guy credit. He not only meant what he said (which of course does not surprise me), he found a way to stay. That is very cool, and I say good for him.

Check out David Bodamer's post on strip center vacancies going up . That's the bad news. the good news is that at least rents are continuing to rise.

I'll admit it: I thought other bidders were better fits for LaSalle Bank because it would be better for the bank to retain some of its autonomy -- and its name -- that I think would have happened with someone other than Bank of America. I just thought that would be better for Chicago and for its business community. But with the Dutch Supreme Court ruling in B of A's favor , that hope is gone , and the Charlotte-based behemoth finally has its strong foothold in Chicago. It also eliminates the possibility of massive litigation. I hope they keep the LaSalle spirit in underwriting loans. I hope they will be as good a corporate citizen as ABN/AMRO has.

The other day, I wrote about Charlie Munger doing the right thing with a bookstore in Brentwood. Today is a project on a smaller scale, but I think it will have a great positive impact on my community. A team of investors is getting together to expand the local Hidden Cove Family Fun Park to include a 50,000 sf indoor sports facility . This will be a smash hit in this very sports-oriented, kid-friendly community. Of the four investors, I think I've met Greg Yates just once, at a golf outing. Nice guy. I have worked a little with Jeff Bennett and his firm here in town, and again, I like Jeff. Blair Minton and I have not worked together, but he is a neighbor and a friend and I think very highly of him. All in all? Good guys doing good work and virtually certain to make a nice return on their investment. Congratulations! P.S. Can't you add an indoor driving range? Please?

Fitch Ratings (the third place agency behind S&P and Moody's) put out a report yesterday warning of potential defaults in the CMBS market because, raising rents notwithstanding, some owners have had "overly optimistic expectations of future rental rates, sales growth and market growth." Lenders have already reacted. While there is still a ton of money chasing deals, credit has tightened and interest rates are up. And it is harder to get a good price on a building these days. Properties have been selling at cap rates that boggle my mind. On the upside, even if there are some defaults, we are at historical lows right now, so a correction is almost inevitable. The lowest tranches and the B-piece (unrated) buyers are the ones most likely to be affected here, and they get high returns in exchange for that risk. I don't think we are in for a crash, just perhaps a return to some semblance of reality.

There's a new development that is trying to get off the ground near my house. Its name is Rhapsody Cove . I've seen some of this developer's work in the past, and my reaction was, "Boy, I wish this near where I live, because I'd like to love there. Alas, like most of my local friends who could afford to live there, I already built a nice house and put too much into it to move. Plus the development is too far from the center of the action for me. Besides, the costlier the house down here, the harder it is to sell; I've seen some houses go three years, even in a booming market, without a sale. Now, this development is good enough that it may convince some people to go there or others to move down here to take advantage of the ponds, trails and open space. I hope they will succeed, though I don't think it is a slam dunk. This brings us to the interesting incongruity. You can call the developer and get a "muddy tire tour" of the ecologically sen

First they get criticized for de - equitizing non-producing partners. Now the firm is under fire for a report that suggests culpability on the Chicago-rooted firm for its work in the Refco bankruptcy in 2005. According to the WSJ , "The 416-page report by bankruptcy examiner Joshua Hochberg takes Mayer Brown to task for having structured "round trip” loans allegedly designed to move bad debt off of Refco ’s books." Mayer denies the allegations. And, among others, Grant Thornton is also apparently implicated in the report . Does this mean Mayer is in big, big trouble? I hope not. I know a few lawyers there and have worked with (and against) them enough to have tremendous respect for the firm and its attorneys. I should also note that I don't think there is any allegation of criminal wrongdoing on the firm's part. But there is an anti-lawyer climate out there right now. First Jenkens & Gilchrist goes down because of one or two bad apples. And ce

Well, the long streak of continuous REIT profits had to end sooner or later. I noticed this over the weekend while looking at my own investments, and The Wall Street Journal confirmed it today: REIT returns were down 9% in the second quarter. And it could have been double that but for a rally. The usual reasons are cited: increased borrowing costs, concern about the subprime residential lending disaster causing a spillover effect (though it has not happened yet), yadda yadda yadda. Maybe the uptick will be helpful for the 3Q, but only time will tell.

It did not take long for Brendan Reilly, the new 42nd Ward alderman, to show that he does not want to be seen as another Burt Natarus. Natarus (who, BTW, I really like because I think he calls everything the way he sees it -- unlike just about any politician in 2007), was criticized by some for being too pro-developer. Reilly came out today against the proposed demolition of the Lake Shore Athletic Club and its conversion into yet another high rise condo building. The current owner, Northwestern University, and the developer, Fifield Cos., have been contending that the existing building cannot be reused in any economically feasible way. Reilly's opposition spells trouble for the proposed project. Fifield intends to fight. It apparently contends that “Once the actual legal and construction-related issues are debated, we feel confident that the concept of re-use will prove to be the lowest-and-worst use for the property.” (Is it me or does this statement come off a little bad?)

There. I said it again. People read about the $160,000 salaries that entry-level attorneys at the largest firms in the largest cities are earning and think, "This is the job for me!" Please, please, please don't go to law school if money is your only goal. There are better ways to make a lot of money. You should either have a passion for law or for something related to law or because you want to be in business or some field where you think a law background might help. And read this story first if you don't believe me . Remember, the coin you read about is only available to the top grads of the top law schools at the top firms in the top cities. There are probably more entry-level lawyers making $30,000-$50,000 than $160,000, and they are saddled with debt up to their ears. Disclosure: I've been on all sides of this argument, so I know about what I speak. I've been a small firm associate making close to market pay, a small firm associate making next to no

A nice portfolio of 50 grocery stores with 2.3 million square feet of retail ? How about 475 Fifth Avenue in Manhattan? (the intersection of 41st & Fifth, for non-New-Yorkers) Those deals sold for $160 million; figure $5 million in costs and some extra cash to pay me. Or, if you have some cash to burn, you could buy a single-family residence in Beverly Hills: the Hearst Mansion . It is on the market for $165 million. This is no Hearst Castle in San Simeon (now a state park), but it ought to be big enough for just about anyone: 29 bedrooms, three pools, a theater and a disco. (Disco? Time for renovations....) It will be curious to see who the buyer is and the final price at this behemoth. I could not find any pictures offhand, but the estate was apparently used in The Godfather . So make an offer the owner can't refuse.

Rumors are still swirling that Macy's is on the takeover block, with Andrew Lampert and Sears Holdings being the latest possible buyer . If so, will anyone in Chicago mourn this transaction? And what of the dirt? Does the Marshall Field & Co. brand return in any way? (Sales are down, down, down, say the media.) Or does the iconic State Street store close like Carson's did, leaving a huge gap right across from the infamous Block 37? UPDATE: Sears gave guidance today that it will not make its earnings target again this quarter . Needless to say, its stock plummeted. That does not mean Lampert can't go after Macy's, but it is bad news to say the least. Of course, there are those out there who have thought all along that Sears/KMart was a pure dirt play in that the land was worth more than the value of the company, and maybe the same is true with Macy's. UPDATE 2: Citibank disagrees with other analysts , and it makes some sense, too.

Here is the latest scoop from Bloomberg on the David Bershad guilty plea to one count of conspiracy. He's going to pay a $250k fine and forfeit $7.75 million. Sentencing is set for June 2008, presumably to give prosecutors enough time to see how much dirt he gives them in order to recommend a sentence, which could be as high as five years. Bershad , needless to say, has had his relationship severed with Milberg . The story also reports that Bill Lerach will step down as the leader of his own firm within 60 days, so if that is true we know what that means. But then those reports have been floating about for some time now. I know from reading the blogosphere that there are some people that will be ecstatic about this. Many people just loathe Milberg and their ilk. I'm not one of them. I just can't be happy about the misery of others. As for Bershad , some may say that he is getting off easy given the money he's made, but a felony conviction and its accompanying disb

Looks like the state-owned China Ocean Shipping is serious about putting a major transshipping cargo (moving items between ships), shipbuilding and training facility somewhere in the Philippines. Can you say Subic Bay or Sangley Point (both former Navy bases)? Good. I knew you could. This could be a huge stimulus to an economy that needs it, and this project may make a significant rival to Hong Kong and Singapore, both of which are very expensive places to do business. Before you ask what this has to do with dirt, this would be a $3+ billion project. I'll take a piece of that.

Well, well, well...David Bershad appears to be cutting a plea deal in exchange for singing about what he knows went on at Milberg Weiss, the king of class-action firms that has been accused of making illegal kickbacks to clients in order to get the firm named as lead counsel in this extremely lucrative game. I've never liked class action lawsuits, as they seem to benefit the lawyers and rarely the victims. But only a fool would not say that the Milberg guys were and are the best in the game. So, just how are Mel Weiss and Bill Lerach feeling these days? And what about Partner A and Partner B ?

We all knew this was coming . And we all but knew a P/E firm would be the buyer. Limited Brands announced previously that it was going to sell Limited Stores and Limited Express to concentrate on Victoria's Secret and Bath and Body Works. A sale of 75% of Express has closed, and now 75% of Limited will sell for about ~$50 million, which Limited Brands says is a wash with no profits. That comes out to about $200k for a 75% stake in each store. I wonder aloud what the value of the retail leases alone would be.

Here's a good post on in-house counsel rating law firms based on customer service and "arrogance." The full list was not published in the article, but I note that Ropes and Gray was both on the "A-Team" in customer service and on the most arrogant list. That's sort of like Howard Cosell, Mr. Arrogance himself, being both the most loved and most hated sportscaster in the US back in the 1970s. What I don't understand is why client put up with this. Only 32% of executives would recommend their outside counsel to a fellow GC. And only 25% think their primary outside counsel excels in client service. But I don't feel sorry for the 70% that don't like their lawyers, because they ought to find new ones. If your lawyer does not return calls or e-mails promptly, find one who does. If your lawyer is Howard Cosell and you hate Howard Cosell, then get Chick Hearn or Vin Scully or Haray Caray or Ernie Harwell -- you get the picture. There's plen

Check out posts from Dealbreaker.com (with a chart showing the out-of-control prices in London). Goldman's putting $4 billion of German dirt on the market. But what is more interesting is this quote from Fintag.com: "As we are becoming known as the sage of the market for our startling predictions of "what happens next?", it is with great pleasure that last week the world was alerted to the great commercial property crash. With Goldman following our advice and Morgan Stanley starting to offload its worse performing property (which is most of them because rental income is below LIBOR) we are glad to be of service." Rental income below LIBOR? For you civilians out there, that means the income from the property is less than the interest rates out there for commercial loans; e.g. , you income on a property is 5.5% a year but interest rates are 6%. See a problem? (LIBOR is the "London Interbank Offered Rate -- the commercial loan equal to prime in the resi

The Economist is probably the best magazine in the world. So, when it makes a prediction that (a) the private equity market is in for a storm, and (b) the storm may end up hurting pension funds and insurers and other major investors big-time, and (c) the result could be huge defaults on debts, bankruptcies and redundancies (that wonderfully British term for layoffs), I listen. There's been a heck of a run. But if this prediction is correct, and the life blood is taken out of many companies in order to continue large returns -- not to mention the massive earnings (I can't say income, since they are not taxed at the income rate like us normal folk) these new-fangled Masters of the Universe command -- then we are in for a major correction in the equity market and perhaps one in commercial real estate to boot. I'm not going to be Chicken Little, because most dirt is still comparatively cheap in the US, but I am keeping an eye out for what may be to come. And I'm sure

I've heard of interesting places to build commercial property, but this one takes the cake. The Philippine government has recently canceled a permit for a Korean developer to build a spa on the crater of the Taal volcano, which is about an hour's drive from Manila followed by a boat ride across a lake. Now, I know this area. It is stunning. I've not been to the volcano itself, but I've been to the area, including scenic Tagaytay, and I've even thought about buying some property there, as other expats and wealthy Filipinos have. There is some beautiful Western-style developing going on in that area. The story, from Forbes , hints that there are some interesting land title disputes and some possible inter-governmental infighting, which is often the norm in the Philippines. (For you old-time title nerds out there, the Philippines uses the Torrens system, but much of the land is unregistered, so quiet title actions are very common.) I'll contact some of my sour

As an avid reader, I love seeing stories like this . Charles Munger, the founder of one of LA's most prestigious law firms (and, of course, Warren Buffett's partner in Berkshire Hathaway) owns property in Brentwood that he planned to convert to condos. Ho hum. But, so the story goes, the location is the home to Dutton's, perhaps LA's best independent bookstore. In response to neighborhood opposition, Munger has changed his plans and will build retail instead. Of course, retail is hotter than residential right now. But, given the low rent Munger says he will charge the bookstore and the way the construction will proceed to minimize interfering with business, he is definitely not maximizing his profits. So I say thanks, Mr. Munger. It is refreshing to see that there is more in the world than making a buck. This quote from the LA Times story is so spot on: "'Bookstores are fragile,' he said. 'Jostle them slightly and they never reopen. The best

I guess I needed this post from New York Lawyer (free sub. required for now, who knows what with the ALM merger announced today) to remind me that most lawyers are not great entrepreneurs. The gist of the story is this: the anonymous author (a BigLaw associate) has a friend who went solo and now appears can't wait to return to the womb. Here's why, according to the author, solo practice sucks, and my rebuttals from real life experience: 1. Yes, you can work whenever and wherever you want, but get used to using Mr. Coffee and making your own java. Response: I have a good coffee machine in both my offices and brew to my taste. If I am lazy, oh boy, I'll spend $2 for Starbucks. Of course, one upside to going on my own for me is that I kicked my caffeine addiction. I don't drink coffee anymore; I don't need the coffee to keep me awake. By the way, I do also have to work when my clients need me, and yes, sometimes that means nights, weekends and vacations. But this is

The WSJ is reporting that business travel is becoming more and more Spartan , while Barry Sternlicht is planning to develop not one but two brands of luxury hotels to compete in an ever-increasing market. Either someone is wrong, or both are right and with different target audiences. The business travelers are staying at Holiday Inn Express these days, while leisure travel or real high-end travel may go to 1 or Baccarat. I find the dichotomy interesting nonetheless. On a related front, I enjoyed reading Larry Bodine's ratings of airlines and hotels for marketers yesterday. While I am not a marketing professional, I tend to agree with his assessments.

...if I am reading about the history of shopping malls. Here's a link to a project on the subject, courtesy of David Bodamer and the Retail Traffic Court Blog . Actually, the oldest malls date to around 1920, so I guess I feel better. And I even did some work on something related to Country Club Plaza (widely regarded as one of if not the first mall) some years ago. Before going to law school, I was a Ph.D. student in history. I love reading history books and biographies, and if you don't believe me, you ought to see my library. This was a nice little synopsis of mall history that made me want to read more. I was disappointed that they did not mention the first vertical shopping mall, which I believe was Water Tower Place right here in Chicago. Now that I've said all that, it s time to bill a little and then hit the bookstore! See, I told you so.

This is good news if you have been buying downtown buildings. Vacancies are at a four year low, in the 12% range overall. The big news to me was the marked declines in vacancy in the West Loop and in River North.

Notwithstanding complaints that it is expensive and unnecessary (an article late last year from Forbes, no less!), title insurance is still a vital player in the real estate business. And I happen to disagree with the conclusion, at least from my perspective as a commercial guy who also needs extensive escrow services and other real estate related help. Title companies can be either a huge help in getting a transaction done, or a huge hindrance. I have encountered both over the years. I have always tried to steer business to companies and underwriters that think outside the box to solve problems that less creative types thought were unsolvable. Many people think that the lawyers control who picks the title companies to do the deals. And maybe some do, especially in states where lawyers are much more involved in the process, such as Florida or Georgia (where most real estate lawyers, even in commercial deals, are title agents and derive significant revenue from it). But guess what?